Mining debate tricky test for SA s ruling party

September 22, 2010

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By , DURBAN, Sept 22 – South Africa\’s ruling party is navigating a tricky path between business and the left this week as it debates nationalising the country\’s mines at a major policy review conference.

The African National Congress has repeatedly said nationalising mines is not its policy, but agreed to discuss the issue in closed-door sessions at a five-day meeting this week, seeking to soothe the party\’s disgruntled left wing without alienating business leaders or international investors.

The meeting is a leadership test for President Jacob Zuma, who rose to power in 2009 on labour and left-wing support but has faced sharp criticism from backers calling for mine nationalisation and a leftward shift in economy policy.

After opening the meeting Wednesday with a left-leaning speech that was welcomed by labour leaders, Zuma toured the business pavilion Wednesday, greeting company representatives with handshakes, hugs and a toothy grin that belied the tensions pulling at the ANC.

As eager business leaders clustered to meet him, Zuma — who gave a nod to private-sector fashion sense in a Cartier watch and Louis Vuitton belt — said relations between business and the ANC are "wonderful".

"Politics and business go together. Once business steps closer to the political party in power, it means things are going very well," he said.

His visit came after ANC Secretary General Gwede Mantashe said Tuesday that meeting delegates would debate mine nationalisation, but insisted the discussion would produce only proposals — not a change in policy.

South Africa is among the world\’s largest producers of gold, platinum and chromium. The mining industry brought in 43 billion dollars (32 billion euros) in 2008 and is the economy\’s largest export sector.

Julius Malema, the fiery leader of the ANC\’s youth league, has issued repeated calls for the country to nationalise mines.

A key Zuma supporter in 2009, he said the youth league will not support candidates who are against nationalisation, raising speculation it would throw its support behind a rival of Zuma for the next elections in 2014.

But analysts say it is unlikely South Africa would risk alienating business leaders and international investors by nationalising mines.

"The government is really nervous about foreign direct investment, that any sort of radical policy changes will scare investors away," political scientist Dirk Kotze told AFP.

"Nationalisation of mines is more political than economic. It is something which Julius Malema is using to generate sympathy for himself because he thinks it will appeal to the general population," he said.

"It has a highly emotional value, and that is what Julius Malema is exploiting."

The nationalisation debate comes as the ANC struggles to bridge other divisions on economic policy.

The country\’s main labour federation Cosatu, a key ANC ally, has called on the party to implement a range of pro-labour policy shifts and create more jobs in a country where one in four people is unemployed.

Cosatu wants the ANC to take action to boost exports by weakening the currency, the rand, and abandon the government\’s policy of inflation targeting, which seeks to keep the inflation rate within a three percent to six percent band.

Kotze said the challenge for Zuma is to balance the pro-growth, free-market policies he inherited from predecessor Thabo Mbeki with the urgent demand for more jobs and pro-poor policies.

"The main pressure on the government from the left is how to still maintain a very strong growth path but at the same time address the demands for job creation and for socio-economic development in general," he said. "That is the main challenge for the ANC."